You may have read online that many real estate agents fail. The National Association of Realtors (NAR) found that 75% of Realtors fail within the first year of being in the industry and 87% after five years. So the questions are, “Why do real estate agents fail?” and “How do I avoid failure as an agent?” I will explain the seven main reasons why real estate agents fail and provide tips on how to avoid these mistakes.
Key takeaways in this article:
- Have a winning mindset.
- Build relationships, not just leads.
- Create a business plan outlining finances and goals.
- Follow-up is vital; stay consistent.
- Study your market and share valuable information.
- Don’t quit when it gets tough.
1. Having the Wrong Mindset
Owning your own real estate business (which you do as an independent contractor) is a challenge that comes with stress. You can’t guarantee your next client or your next paycheck. Unfortunately, it’s easy to slide into Negative Town when you don’t see the money rolling in or getting rejected from leads.
If you think, “They aren’t going to answer the phone call anyway” or “They’re never going to find a house they like,” your mindset is out of whack. Remember that to succeed, you are going to have to fail. You will have to hear many no’s to hear a yes. I won’t sit here and say it’s easy, but I will tell you that you can become more resilient. The answer is having the right mindset.
How to Avoid This Mistake
- Learn the strategies of successful agents, like how to bounce back from failure and rejection.
- It is critical that you choose the right broker. You must get the amount of support you need from your fellow agents within that brokerage, as well as your broker.
- If your brokerage or team does not provide you with coaching, hire a growth coach.
- Join mastermind groups so that you can have a space to vent to other real estate agents about your struggles and get advice and encouragement from more experienced agents.
- Listen to podcasts and read real estate books that will grow and keep your mind positive and healthy! What we put in is what we get out.
2. No Financial Plan
Money, or lack of it, is another main reason why real estate agents fail. Agents often make the mistake of hearing how much commission other agents make and think they’re raking it in. But they don’t consider their expenses, such as brokerage or team splits, taxes, education, marketing, and lead generation expenses. It will be tough to succeed if you don’t plan for these finances and are on a budget. You must make a financial plan and use strategies to make money as an agent.
How to Avoid This Mistake
- If you are a new agent, set aside about six months’ worth of bills and living costs in an emergency fund and don’t touch it.
- As you build your business, try to live on only 50% and allocate 20% to 30% to save and reinvest in its growth so you won’t feel stressed during your less busy seasons. (Even top producers experience some months with no closings.)
- Always have a financial and business plan in place.
- Research and compare different lead generation companies before signing up and investing your money.
- Use a SEP IRA to invest up to 20% of your net income and plan for retirement.
I always put 25% of my commission check into a separate tax account to pay quarterly taxes. Just think, if you spend all the commission you receive without saving anything, how will you pay taxes when they’re due?
3. Lack of Skill
While real estate education courses teach you about industry laws and regulations, they don’t teach all the ins and outs of a real estate transaction. Agents make the mistake of passing their exams and not learning or practicing new skills.
According to NAR, 93% of homebuyers want their real estate agent to know the purchase process, and 91% of buyers want their agent to know the real estate market. Not having these skill sets, honesty and integrity, communication, negotiation, and technology skills will ultimately hinder your capabilities in real estate.
For example, there was one time when I didn’t answer my phone when a potential buyer called, and within the hour that it took me to call them back, they had already called another agent to help them. I’ve never made this mistake again.
How to Avoid This Mistake
- Read about these nine real estate skills to help you succeed. Make a list of the skills you feel you need to work on.
- Practice! Try role-playing negotiation skills with your fellow agents.
- Get involved in activities outside of real estate that will help you. I think golf is a great game for teaching patience. (Plus, you can meet potential new clients at the club!)
- Take MLS courses that teach you more about data analysis.
- Join programs through your local agent association, such as leadership, that will improve your teamwork and empathy skills.
- Ask clients and non-clients what they want and look for in a real estate agent. Then, work on the skills they have expressed that are important to them.
- Practice effective communication skills such as active listening and asking open-ended questions, but always ask your clients how they prefer you communicate with them. The NAR highlights from 2023 show that 94% of Realtors use text messaging to communicate with their client, but don’t assume this is what your clients want.
Pro Tip
Even if you can’t answer the phone or an email, immediately text saying you are in another appointment but will call them back within the hour. Better still, set up an automated response.
4. A ‘Get Rich Quick’ Attitude
Too many agents make the mistake of trying to “get rich quick” in real estate or trying to close X number of “deals” per month. This mistake will hinder building long-lasting relationships, and you won’t have a solid real estate career foundation. Considering 89% of homebuyers would use their agent again, you’re missing out on many opportunities if you jump from client to client daily.
The second piece to this mistake is not investing in a good client relationship management (CRM) system early in your real estate career and not understanding the importance of your CRM in building these relationships. It is common for agents not to spend enough time keeping their database organized and not strategizing how they could naturally attract more potential clients or even have a strategy for following up. Real estate is a relationship business, which takes time, so a “get rich quick” strategy won’t work.
How to Avoid This Mistake
- Reach out to everyone you know and offer them your professional real estate assistance.
- Add everyone you know to your CRM. Continue adding new contacts daily as you begin networking and meeting new people.
- Keep your CRM organized. Spend 10 minutes at the end of your day doing maintenance and making notes if needed! Daily upkeep will make it less overwhelming for you.
- Build relationships by staying in contact with leads in various ways. For example, mail holiday or birthday cards, make monthly “check-in” phone calls, send text messages, and email monthly newsletters.
- Join community Facebook groups, participate in community sports or church groups, or start a networking group.
- Host events for past, present, and future clients. For example, host a “Photos with Santa” event in your community or offer your past clients a free “spring family photo” session.
- Get as many real estate tips as possible from experienced agents.
One caveat: Don’t get caught up in these tasks at the expense of reaching out to prospective clients and leads to set up listing appointments and buyer nurturing. It’s easy to avoid rejection by “looking busy,” but you’re just spinning your wheels without following up with leads.
5. Not Following Up
Still wondering, “Why do real estate agents fail?” What if I told you that not following up is a huge contributor to how many real estate agents fail? A study from InsideSales found that 50% of non-essential sales (including homes) happen after the fifth touch point. Yet, 44% of real estate agents stop following up with a lead after the initial no, and another 22% stop after the second.
So, if you do not follow up several times, you are losing fruitful relationships and potential business. Also, 50% of buyers are qualified but not ready to buy. If we do not follow up with these buyers while they are qualified, they will work with another agent who takes the time to stay top of mind and reach out to offer guidance.
How to Avoid This Mistake
- Utilize your CRM systems and automated outreach, including drip campaigns.
- Organize your leads into different categories so you know how often to follow up (for example, currently looking, one year from moving, just looking, past clients).
- Nurture your leads. Genuinely care about people and how they are doing. Ask how they and their families are. Don’t just talk about business every time you follow up.
- Stay consistent. Set reminders for each lead in your CRM.
- Don’t doubt the process. My clients usually text me back and say, “So sorry it took me a while to get back to you. I’ve been so busy.” They follow up by thanking me for staying in touch and reaching out when they are ready!
6. Lack of Market Knowledge
How can people trust that we know anything about the market if we aren’t providing our knowledge to them? You need to focus on gaining people’s trust by showing off your expertise in the industry. I am not referring to a simple social media post about the past month’s stats. People want to know (and this is just the tip of the iceberg):
- How many houses were sold last month in their community
- How much can their property go for on the market
- How much do homes cost in a particular area
- Best neighborhoods to find homes in a specific state
- Mortgage rates in your state
By not understanding and sharing this knowledge with their potential and current clients, agents are making a mistake that will cost them business.
How to Avoid This Mistake
- Share your knowledge with potential clients using more video.
- Share housing market charts on your social media platforms and include them in your client’s monthly newsletters.
- Continuously learn about real estate trends. You can start here by reading 88 shocking real estate statistics.
- Post daily educational videos on your stories and social media feeds. You can post tips for buyers, sellers, renters, or investors!
- Share information about your local community. Make it fun! Show why you love living in your city and why others should move there, e.g., local restaurants, grocery stores, coffee shops, parks, new construction, tourist attractions, and gyms.
- Mail or hand out neighborhood data reports.
- People appreciate it when you provide value and helpful information without directly asking for their business. Come from a place of contribution!
7. Quitting When It Gets Tough
The most common reason why real estate agents fail is that they don’t buckle up and get through the difficult seasons. Even if you want to be a part-time real estate agent, you must be committed to succeed through the mountains and the valleys. You’ll often hear agents refer to the “roller coaster” of the career, including agents who have been in the business for many years.
So why do real estate agents fail? Because they don’t know their why and think quitting is their only option. Not knowing your why creates a very easy escape route when the job gets tough. You’ll need a bigger why than money to keep going when business is slower. You must have passion and drive to help others to succeed in real estate.
How to Avoid This Mistake
- Know your why. There are many books that you can use as a tool if you need help finding your why. One I recommend is “Finding Your Why” by Simon Sinek.
- Include your why in your business plan.
- Think about why you want to succeed as a real estate agent daily, even when you are on top of those mountains!
- Reach out to the support system you have in place—don’t isolate yourself.
- And again, I’ll remind you to save money or get another source of income when business is a little slower.
Bringing It All Together
Whether you are a new or seasoned agent who needs the reminder, you must believe you can succeed. I’ll wrap it up for now by leaving you all with these inspirational real estate quotes. Write them on sticky notes and put them where you’ll see them throughout the day. Believe in yourself, continue learning daily, and don’t give up!
I hope we can increase the real estate agent success rate this year together! If you have any other personal success tips, we’d love for you to leave a comment below and share.
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